Q1: Budgets and Variance Analysis Jackson Company manufactures electric Heat Pump and uses standard costing. The company prepared its budget for the year ending 31 December 2020. The budgeted sales price was $950 per unit, and the budgeted volume of production and sales for the budgeted period was 15,000 units. The company uses standard costing. The budgeted standard cost in terms of direct material and direct labour to produce one unit are as follows: Quantity per Heat Pump Components Standard cost Description Part 1 1 unit $150 Part 2 I unit $40 Compressor Throttle device Part 3 I unit Part 4 I unit Part 5 I unit Part 6. 1 unit Part 7 1 unit Direct Labour hour 3 hours Heat exchanger Four-way reversing valves Filter driers and bi-flow driers Pressure control Controllers Labour The costs incurred to make the 14,000 electric Heat Pump units were as follows: $45 $20 $60 $90 $50 $60 per hour Act Quantity Units Costs Part 1 14,010 Unit $1,961,400.00 Part 2 14,020 Unit $560,800.00 Part 3 14,005 Unit $644,230.00 Part 4 14,015 Unit $252.270.00 Part 5 14,000 Unit $812,000.00 Part 6 14,000 Unit $1,260,000.00 Part 7 14,000 Unit Direct Labour 43,400 hour $686,000.00 $2,560,600.00 Total direct costs $8,737,300.00 Actual Variable overhead costs $860,000.00 Actual Fixed Overhead Costs $230,000.00 Actual total costs $9,827,300.00 Also, the company budgeted a total of $900,000 variable overhead costs for the year ending 31 December 2020. The variable overhead costs comprised machine operating costs ($480,000), indirect labour cost ($270,000) and indirect material costs ($150,000). The company uses budgeted direct labour hour/s for allocating both fixed and variable overhead costs to products. The budgeted fixed overhead costs for the year ending 31 December 2020 was $270,000. The fixed overhead costs comprised the salary for the factory supervisor ($100,000), the cost of utilities ($20,000), annual rent ($120,000) and the depreciation on the machines ($30,000). At year-end, 14,000 electric Heat Pump units have been made and sold and total revenue for the year was $13,440,000. Actual fixed and variable overhead costs for the year ending 31 December 2020 were as follows: Actual Variable Overheads Machine operating costs $460,000.00 Indirect Labour Indirect Material Total Actual Fixed Overhead Costs Factory supervisor $95,000.00 Utilities $15,000.00 $280,000.00 Rent $100,000.00 $120,000.00 Machine Depreciation $20,000.00 $860,000.00 Total $230,000.00